FOR IMMEDIATE RELEASE
NAIC Adopts Valuation Manual
NATIONAL HARBOR, Md. (December 2, 2012) - The National
Association of Insurance Commissioners (NAIC) voted to enhance consumer
protections today with the adoption of the Valuation Manual. The manual
contains details of a principles-based approach to establishing insurance
company reserves. The manual was adopted by a supermajority of the
membership during the Fall National Meeting.
Members also voted to create an executive-level Joint Working Group of
the Life Insurance and Annuities and Financial Condition Committees, which
will require consumer participation in the design of the transition to the
principles-based reserving (PBR) process.
"As state regulators, we take insurance company solvency very
seriously. It is vital that consumers get the benefit of the promises made
by their insurers," said Kevin M. McCarty, NAIC President and Florida
Insurance Commissioner. "The adoption of this manual is a win-win for
life insurance consumers, as we expect it will lead to more choices in the
marketplace. Additionally, PBR was a key initiative identified by our
members this year and its passage signifies our commitment to modernizing
our regulatory system to meet the needs of the market. We are committed to
providing all the resources necessary to a successful transition."
"Life insurance products are becoming increasingly complex,"
said Julie Mix McPeak, Chair of the NAIC Life Insurance and Annuities
Committee and Tennessee Insurance Commissioner. "This modernization of
our system should lead to industry innovation, allowing companies to
develop products consumers want at more affordable prices."
The Valuation Manual defines the methods used by regulators and insurers
to calculate the reserves of insurance companies. PBR incorporates factors
beyond interest rates and mortality to better capture portfolio risks and
ensure corporate solvency.
The new working group will focus on guidelines to ensure there are
adequate resources for states to implement PBR, transitioning reserving
practices, data compilation and engaging consumers. With the adoption of
the Valuation Manual and the subsequent amendments, the Valuation Manual,
along with revisions to the Standard Valuation Law and the revisions to the
Standard Nonforfeiture Law for Life Insurance, can be presented to states as
a package in time for the beginning of the 2013 legislative sessions for